Correlation Between PATTIES FOODS and MercadoLibre
Can any of the company-specific risk be diversified away by investing in both PATTIES FOODS and MercadoLibre at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PATTIES FOODS and MercadoLibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PATTIES FOODS and MercadoLibre, you can compare the effects of market volatilities on PATTIES FOODS and MercadoLibre and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PATTIES FOODS with a short position of MercadoLibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of PATTIES FOODS and MercadoLibre.
Diversification Opportunities for PATTIES FOODS and MercadoLibre
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PATTIES and MercadoLibre is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding PATTIES FOODS and MercadoLibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MercadoLibre and PATTIES FOODS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PATTIES FOODS are associated (or correlated) with MercadoLibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MercadoLibre has no effect on the direction of PATTIES FOODS i.e., PATTIES FOODS and MercadoLibre go up and down completely randomly.
Pair Corralation between PATTIES FOODS and MercadoLibre
Assuming the 90 days horizon PATTIES FOODS is expected to generate 6.09 times less return on investment than MercadoLibre. In addition to that, PATTIES FOODS is 1.97 times more volatile than MercadoLibre. It trades about 0.0 of its total potential returns per unit of risk. MercadoLibre is currently generating about 0.06 per unit of volatility. If you would invest 103,140 in MercadoLibre on November 9, 2024 and sell it today you would earn a total of 87,220 from holding MercadoLibre or generate 84.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PATTIES FOODS vs. MercadoLibre
Performance |
| Timeline |
| PATTIES FOODS |
| MercadoLibre |
PATTIES FOODS and MercadoLibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PATTIES FOODS and MercadoLibre
The main advantage of trading using opposite PATTIES FOODS and MercadoLibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PATTIES FOODS position performs unexpectedly, MercadoLibre can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MercadoLibre will offset losses from the drop in MercadoLibre's long position.| PATTIES FOODS vs. SOGECLAIR SA INH | PATTIES FOODS vs. AOI Electronics Co | PATTIES FOODS vs. Richardson Electronics | PATTIES FOODS vs. AIR LIQUIDE ADR |
| MercadoLibre vs. Yanzhou Coal Mining | MercadoLibre vs. TAL Education Group | MercadoLibre vs. Adtalem Global Education | MercadoLibre vs. Eurasia Mining Plc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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